Borrow and Buy: Complementarity and Substitutability of Acquirer’s Alliances and Technology Acquisitions

Paul Nary, Management, The Wharton School

Abstract: I aim to contribute to corporate strategy and technology and innovation management literatures by refining the way we think about how firms’ externally accessible resources and capabilities influence those firms’ heterogeneous boundary choices and their resulting outcomes. Specifically, I propose that in addition to considering acquirers’ own internal resources and capabilities when it comes to assessing acquisition choice and performance, we should also take into account the role of these acquirers’ existing alliances, corporate venture capital investments, and minority investments, as an important source of externally accessible resources and capabilities, knowledge and experience. By considering an acquirer’s multiplex, interdependent portfolio of external relations and investments as potentially complementary or substitutable to both its own business and its acquisition targets, I explore acquisition choice and performance from a perspective that is relatively understudied in strategy literature. Moreover, I propose that we should consider acquisition relatedness not only at the dyadic level between the target and the acquirer, but also between the target and the acquirer’s portfolio of external resources and investments, and show that some unrelated acquisitions are in fact indirectly related to the acquirer vis-à-vis its external corporate development portfolio.